Obscure Chip M&A: Vishay Offers $1.6B for Int’l Rectifier

By Tiernan Ray

Can’t beat ‘em? Buy ‘em.

The world of obscure semiconductors was on the move today, as shares of International Rectifier (IRF) rose $3.67, or 20%, to $22.49 after the company received an unsolicited offer from Vishay Intertechnology (VSH) to buy IRF for $1.6 billion in cash, or $21.22 per IRF share. This is not the first time the companies have tangled. Since selling a business to Vishay in April of 2007 for $50 million, IRF has been hit with claims by Vishay saying Vishay overpaid because the businesses it bought from IRF turn out not to be in the kind of shape Vishay thought they were when it did due dilligence on the deal. Vishay was demanding its purchase price be knocked down by $20 million and an additional $50 million in damages Vishay claims it suffered in the deal.

I guess merging is one way to solve all that. Both companies sell an assortment of obscure chips found in a variety of electronics applications.

IRF acknowledged the offer in a press release this afternoon, saying it is considering the offer in light of its “recently disclosed turn around plan.” It also said it plans to continue to defend itself against Vishay’s charges regarding last year’s deal.

In proposing the offer, Vishay said its offer represented “a 20% premium over [IRF's] 30 day moving average of $17.69.” Vishay, which has a market capitalization of $1.75 billion, had cash and equivalents of about $585 million at the end of the most recent quarter. $1.6 billion International Rectifier had $288 million at the end of last quarter.

About Tech Trader Daily

Tech Trader Daily is a blog on technology investing written by Barron’s veteran Tiernan Ray. The blog provides news, analysis and original reporting on events important to investors in software, hardware, the Internet, telecommunications and related fields. Comments and tips can be sent to: techtraderdaily@barrons.com.